A Guide to Transportation Funding

Options Available to Virginia

Jurisdictions

Audrey Moruza

Senior Research Scientist

June 5, 2019

2012 Project Task

Report all tools and strategies available

to local jurisdictions in the

Commonwealth to accumulate revenue

for local transportation projects,

excluding debt instruments.

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VDOT

V I R G I N I A G E N E R AL

AS S E M B LY

Finding a Starting Point

• (Former) VDOT Programming Division: “VDOT does not track

jurisdiction funding sources”

• SYIP by active fund: identified districts with Revenue Sharing

projects

• Weldon Cooper Road, Street, and Highway Finance Survey on LAD

site; investigated responses

• Jurisdictions reporting “special assessments” for transportation

purposes on Weldon Cooper survey: contacted all

• Weldon Cooper Center’s Local Tax Rates, Jurisdiction Budgets,

CIPs, and TIPs; mined for information and contacts

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Complications

• 2012 – report launched, MAP-21 implemented at end of CY

• 2013 – HB 2313 passed by General Assembly

• 2014 –State highway funding allocation changed to SMART SCALE

on graduated roll-out; Title 32 recodification; report scope

broadened to include Revenue Sharing program and LAD as

customer

• 2015 – FAST Act implemented, Virginia program revisions

• 2016 – Weldon Cooper Center’s Local Tax Rates is now distributed

by LexisNexis: $125

• 2012 through 2016 — Programs revised, renamed

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Results - Categories

• Competitive grants

• “Competitive Entitlements”

• Entitlements

• Business licenses for natural resource extraction

• Institutional collaborations

• Land development charges

• Self-funding infrastructure

• Other sources

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Competitive Grants

1. Revenue Sharing grants from VDOT (2006)

Program monies halved in 2018 to 100m; possibly a floor rather than a

ceiling (CTB, Dec. 2018)

7

0

20

40

60

80

100

120

140

160

180

200

FY10 FY11 FY12 FY13 FY14 FY15 FY16 FY17 FY18

Millio

n $

State Revenue Sharing Funds in Final Budget

Competitive Grants

2. VDOT Access Road Program grants

• Economic Development, Airport Access, Recreational

Access

• Direct grants to local governments for eligible projects

• Regular (shovel-ready) or bonded (lacking enterprise

partner) grants, Major Employment and Investment (MEI)

grants

3. Appalachian Regional Commission

• Local Access Roads (ADHS Act of 1965)

• Geographical eligibility (Appalachia)

• Locality + PDC submit proposal to VDHCD

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Competitive Grants

Appalachian Virginia: 25 counties, 8 independent cities

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ARC Local Access Roads • U.S. Congress has limited LAR

total to 1400 miles (by 2016: 1,011.17 mi)

• > 100 mi: MS (>200 mi), AL, PA, SC

• > 50 mi: OH, TN • < 50 mi: GA, VA, WV, NC, MD,

KY, NY (<10 mi) • VA has ~ 37.5 mi

Competitive Grants

4. Transportation Partnership Opportunity Fund (2005)

• Grants up to $5m, loans up to $30m

• For transportation needs of economic development opportunities

attractive to private investment

• Road, rail, mass transit, space travel (Mid-Atlantic Regional

Spaceport)

• Revised in 2016: awards only to agencies or political subdivisions of

Commonwealth

• Matching funds advantageous

• Combinable with other VDOT $ sources (RS, EDAP, COF) and VTC

• Administered by CTB through VDOT

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Competitive Grants

5. Commonwealth’s Development Opportunity Fund (COF) (1996)

• Matched cash grant from Governor’s discretionary fund to political

subdivisions of Commonwealth

• Road, rail, other access costs beyond existing funding capability

• “Performance” agreement required between political subdivision(s)

and private investor(s) for projects in areas of high unemployment

and/or poverty;

• Assistance level is calibrated to level of economic impact: metrics of

job creation, annual wage rates

• “Deal closing” fund

• Administered by VEDP

• Office of the Governor reserves the right to announce awards

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Competitive Grants

6. Agriculture and Forestry Industries Development Fund (AFID,

2012)

• Cash performance grants or loans to political subdivisions from

Governor’s discretionary fund

• “Country Cousin” of the COF: to add value to Virginia-grown

agricultural/forestry products

• Road, rail, other access costs beyond existing funding capability

• “[A] minimum of 30% of the agricultural or forestry products to which

the facility is adding value will be grown or produced within the

Commonwealth of Virginia in normal years.”

• Office of the Governor reserves the right to announce awards

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Competitive Grants

7. Virginia Community Development Block Grant Program (1982)

• Competitive grants only to units of local government

• Eligible communities: those that don’t qualify for direct HUD CDBG

allocations based on population income statistics

• Maximum feasible priority to activities that will benefit low and

moderate income families and assist the prevention or elimination of

slums and blight

• Road expenditures explicitly eligible for community improvement

grant funds

• Based on federal Housing and Community Development Act of 1974

• Administered by VDHCD

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Competitive Grants

8. U.S. Department of Agriculture Rural Development Grants

• Rural Business Development Grant Program

Competitive, unmatched awards to support small/emerging

businesses “outside urbanized periphery” of any city with

population ≥ 50k

Eligible: towns, communities, state agencies, authorities,

nonprofit corporations, higher ed., federally recognized tribes,

rural co-ops

• Community Facilities Direct Loan and Grant Program

For development of essential community facilities where no

incorporated civic authority exists and where commercial credit

is not available at “reasonable rates and terms”

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“Competitive Entitlements”

9. Virginia Tobacco Region Revitalization Commission

(Master Settlement Agreement, 1998)

• Until 2013, to indemnify growers and create economic base

other than tobacco

• After 2013, to “revitalize” former tobacco-dependent jurisdictions

of Virginia

• Southside and Southwest regions eligible for economic

development grants that include access roads: $9.7 million in

FY2018

• Southside region jurisdictions receive annual allocations—21

counties had total balance of ~$22.7 million on 5/29/18

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Legal Entitlements

10. HUD Community Development Block Grants (Housing and

Community Development Act, 1974)

• Annual CDBG appropriation by U.S. Congress to “entitlement”

jurisdictions in each state

• Jurisdictions identified by U.S. Census Bureau and metropolitan

area boundaries published by OMB

• Cities with populations ≥ 50k or urban counties with populations ≥

200k where ≥ 51% are Low to Moderate Income per annually

revised income limits

• Community grants in proportion to extent of poverty, housing

overcrowding, age of housing, growth lag; to address community

needs including streets, sidewalks, curbs, gutters

• Virginia: 30 entitlement jurisdictions in FY16, $34m in grants

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License Taxes

11. a. Coal Severance

§ 58.1-3741.A.

• 0.75% - 1% of gross receipts from the sale or utilization of

severed coal

• 100% to the jurisdiction GENERAL FUND

§ 58.1-3741.B.

• 0.75% - 1% of gross receipts from the sale or utilization of

severed coal

• 75% to jurisdiction ROAD FUND, 25% to VCEDA

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License Taxes

11. b. Natural Gas Severance

3 statutes allowing license taxation at rate of ≤1% of gross

receipts from the sale at fair market value...

• §58.1-3712 to the jurisdiction GENERAL FUND

• §58.1-3713 to jurisdiction ROAD FUND (75%) and

VCEDA (25%)

• §58.1-3713.4 to the jurisdiction ROAD FUND (50%) and

VCEDA (50%)

Coal and natural gas business license taxes may be applied

wherever such deposits are extracted

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Coal and Natural Gas

Deposits and Revenues

Deposit and production data from VA Dept. of Mines, Minerals and Energy

$-

$5

$10

$15

$20

$25

$30

Mil

lio

ns

Local Revenues from Coal, Oil and Gas Severance

Source: Virginia Auditor of Public Accounts

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Natural Gas and Coal

Production 2017

Since 2011,

natural gas production

↓23.6%

coal production

↓41.4%

in Commonwealth of

Virginia

Data and graphics from U.S. Energy Information Agency

Collaborations

12. a. Transportation District Act of 1964 (§33.2-1900 et seq.)

• Northern Virginia Transportation District (1964)

• Funding: 2% regional motor vehicle fuel tax (1980)

Metrorail support

• Potomac and Rappahannock Trans. Dist. (1987)

VRE support with NVTC

Balance to local jurisdictions for discretionary use

Bus service

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Major

Collaborations HB 2313 (2013)

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NORTHERN VIRGINIA TRANSPORTATION DISTRICT

(1964) Transportation District Act of

1964 Code of Virginia §33.2-4903

Revenue: 2.1% fuel tax in member

jurisdictions (Code of Virginia §58.1-2295)

City of Alexandria

City of Fairfax City of Falls Church

Arlington County Fairfax County

Loudoun County

POTOMAC AND RAPPAHANNOCK

TRANSPORTATION DISTRICT (1987)

Transportation District Act of 1964

Revenue: 2.1% fuel tax in member jurisdictions

City of Manassas City of Manassas Park Prince William County Stafford County City of Fredericksburg Spotsylvania County

PLANNING DISTRICT 23 HAMPTON ROADS TRANSPORTATION

FUND (2013)

Code of Virginia § 33.2-2600

REVENUE: HB 2313 (2013)

• 2.1% motor fuel tax in member jurisdictions (Code of Virginia § 58.1-2295)

• 0.7% regional sales and use tax (Code of Virginia § 58.1-638)

PLANNING DISTRICT 8 NORTHERN VIRGINIA TRANSPORTATION AUTHORITY ACT OF

2002

REVENUE: HB 2313 (2013) Code of Virginia §33.2-2510

• 0.7% regional sales and use taxes • Regional deeds of conveyance fee • 2% regional transient occupancy tax • C&I tax or equivalent • (70/30 rule)

Cities of Chesapeake, Franklin, Hampton, Newport

News, Norfolk, Poquoson, Portsmouth, Suffolk, Virginia

Beach, Williamsburg; counties of Isle of Wight, James City, Southampton,

York

HAMPTON ROADS TRANSPORTATION ACCOUNTABILITY

COMMISSION (2014) Code of Virginia § 33.2-2601

Collaborations

12. b. Transportation districts funded by a voluntary local

commercial and industrial property tax

• Uniform Act for the Creation of Local Transp. Districts

(1993)

• Transportation Improvement Districts Within Certain

Counties (2001)

12. c. §15.2-2400 et seq.: Special Service Districts

• Voluntary additional real estate taxes

• Adaptable to a variety of jurisdictions and purposes

• Can pay debt service on loans for transportation

improvements

• Used widely in Virginia

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Land Development Charges

13. Tax increment finance areas (1988)

• Can provide roads and other public amenities

• Segregates real estate tax revenues that result from property value

increases over a designated base year

14. Cash proffers

• Meant to offset the costs of development after rezoning

• 3 statutes for eligibility: only 6 counties, 2 cities, 18 towns still

ineligible by 2010 Census

• 2016 legislation introduced new “reasonable” standards with 3

exemptions relating to Metrorail proximity

• Transportation projects = about 30% of proffer spending FY03-15

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Self-Funding Infrastructure

15. Tolled highways and highway systems

• Dulles Greenway (Virginia Highway Corporation Act of

1988): VDOT to purchase?

• Richmond Metropolitan Transportation Authority (City of

Richmond, Counties of Henrico and Chesterfield, 1966):

Powhite Parkway, Downtown Expressway, Boulevard

Bridge

• Chesapeake Transportation System: Chesapeake

Expressway (2001) and Dominion Boulevard (2017)

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Other Options

16. Local Resource Allocation Options

• Property tax set-aside

• Commercial and industrial property tax (2007) (Planning

Districts 8 and 23)

• Business, Professional and Occupational License Tax set-

aside

• Motor Vehicle license tax set-aside

• Sales tax set-aside

• Statewide Local Option sales tax set-aside

• Public Right-of-Way use fee: available to localities that

maintain their own roads AND have passed an ordinance

authorizing collection

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BIG PICTURE

C&G

ARC

MSA

RMTA

HRTAC

CTS

NVTD

PRTD

A Guide to Transportation Funding Options

Available to Virginia Jurisdictions http://www.virginiadot.org/vtrc/main/online_reports/pdf/19-R1.pdf

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Veterans Bridge

City of Chesapeake